Many new build developments in the popular ski resorts are now designed as ‘tourism residences’. That means that you have a legal obligation to rent out your property when you are not using it yourself. By forcing owners to rent out their properties, the Austrian authorities are ensuring that the resorts do not suffer from the ‘cold’ or empty beds so often associated with some French ski reports.
As an incentive for prospective property hunters and in acknowledgement of the benefits their business brings to the local economy, frequently the VAT on the purchase will be waived.
Although VAT is 20% in Austria, this break often results in a discount of between 10-20% discount off the gross purchase price due to different taxing practices for the land and the development. If you benefit from this tax break, it is worth noting that your purchase costs (right) will still be based on the gross price of the property.
Capital Gains Tax
There is no specific capital gains tax in Austria. Instead, any capital gain is taxed as business income, and, as such, is subject to 25% rate. Before 2012, profit on the sale of a property was taxed at 50% during the first 10 years of ownership.
Tax on Rental Income
Rental income is taxed as income in Austria and is therefore subject to the same rates as income tax which in 2014 were as follows: Up to 11,000 = 0%, 11,001 – 25,000 = 20.4%, 25,001 – 60,000 = 33.7%. For non-resident owners who live in the property less than 70 days per year, the 0% band is reduced to €3,000. A dual taxation agreement exists between the UK and Austria so that you are not taxed twice. You will be given a tax credit in the UK for any tax paid already on Austrian income.
If you rent out your Austrian property to guests, then they will need to pay a daily tourist tax to the local council. Villages impose this tax in order to raise revenue on properties registered as holiday homes – if your property is registered for permanent residency, the tax will not be payable. It is the law to charge tourism tax on all guests over the age of 14 for each night they spend in your property. The rate varies between villages but is typically between 80¢ and €3 per night, which your management agent will to pay to the Gemeinde (council) on a regular basis.